Economic development and its social impact
After experiencing a short period of market downturn caused by the financial crisis that broke out in 2008, the property market in Hong Kong is on back on track and has been on fire during the past couple of years. Many people are buying up first- or second-hand residential flats for their own use or investment purpose. This has been evidenced by the increase in the number of residential property agents Hong Kong. Commercial and industrial properties have also seen a significant rise in prices too benefited from benign market sentiment. The stellar performance of the property market has been buoyed by the economic recovery which has taken a steady pace ever since governments around the world rolling out accommodative measures to stimulate their economies. With China’s economy growing strongly over the past decade, Hong Kong’s market has been performing particularly well given its status as a gateway to the China market for overseas investors and companies looking to do business in the country.
The close link between Hong Kong and China has made the city a preferred destination for global investors seeking to tap into the vast market in China.
International economic environment is another factor driving the rise in the local market. The global economy is awash with liquidity as a result of near zero interest rates after governments implemented quantitative easing measures to rescue their economies. The money-printing initiative undertaken by central banks around the world has triggered an outflow of capital away from developed economies into emerging markets to look for attractive investment returns. Backed by a matured and sound financial system and its unparalleled status as a springboard to the Chinese economy, Hong Kong’s economy has been growing hand in hand with China’s. The issuance of individual visit permits by the Chinese government allowing mainland Chinese to visit Hong Kong as individual visitors has led to a notable increase in the number of tourists which further boosted the property market in Hong Kong. Rentals of retail spaces in prime locations have gone up tremendously a few years back resulted from a tight supply of shop for rent in Hong Kong as retailers scrambled for space to do business to take advantage of the increase in tourists. Double-digit increases in rents on lease renewal has become a norm crowding out small businesses such as traditional grocery stores and local eateries.
Not only are traditional businesses being squeezed out and forced to close down as a result of the economic development in recent years, the society as a whole is facing more serious issues that cut deeply into people’s lives. The numerous demonstrations and protests against the proposed political reform and the rift between locals and mainland immigrants are some of the undesirable outcomes along the way that the local government and Beijing must tackle wisely to ensure a sustainable development in future.
